Panel says Senecas must restart casino revenue-sharing payments

ALBANY — A three-member arbitration panel has ruled that the Seneca Nation wrongly halted more than $100 million in revenue-sharing payments to the state derived from the three gambling halls it operates in western New York.

In a 2-1 decision released Tuesday, the board said the tribe's decision to stop making the payments in 2017 violated the compact it signed with the state in 2002.

Story Continued Below

The nation had argued that when the agreement automatically renewed in 2017, the revenue-sharing provision was not included because of a drafting omission, and therefore expired.

“A majority of the Panel ... supports the conclusion that ‘renewal’ means that the Compact was continued on the same terms and conditions that were in place immediately prior to expiration of the Compact’s initial term which entailed revenue sharing for exclusivity,” the 57-page document states. “To conclude otherwise and interpret ‘renew’ to mean that the Nation gets exclusivity without sharing revenue would render several provisions of the Compact meaningless, ignore the purpose of the Parties’ agreement, challenge common sense and produce a commercially unreasonable result.”

The state and the Senecas each selected one member of the panel, and then jointly designated the third. The Senecas' nominee — Kevin Washburn, a University of New Mexico Law School professor and former Interior Department official — voted against the decision, saying it “rewrites the Compact in a way that harms the Nation and provides an unjustified windfall to the State.”

Seneca Nation President Rickey Armstrong said in a statement that the tribe still believes it correctly read the compact’s language.

“While we know we are right on the law, we also knew that making that argument to an arbitration panel gave no assurance of an opinion in our favor,” Armstrong said. “As is often the case, the Courts, and apparently arbitration panels, do not always decide cases on the law, even their law. We have prepared for this circumstance, and, now that the panel has issued its opinion, we will take the appropriate time to review and respond to the opinion, and move forward,"

The tribe's move had roiled local governments in the region because they receive a portion of the revenue sharing payments — which come from 25 percent of the slot machine revenue at the Seneca-operated casinos — and had relied on it to balance their books. The credit rating for Niagara Falls was downgraded by Standard & Poor's because of the impasse, and it received $12.3 million in September as an advance to bridge the shortfall created by the protracted dispute.

Gov. Andrew Cuomo had raised the prospect of the Senecas losing their exclusive franchise to operate casinos in the region if they continued to withhold the payments.

"We're thankful the arbitration panel held a fair hearing of the facts and ruled in favor of the state and the local communities that have been hurt by the Seneca Nation's actions,” Rich Azzopardi, a senior adviser to Cuomo, said in a statement. “It was clear to us that the Nation had an obligation to continue payments — period. According to the Compact, this arbitration process was prescribed to resolve conflicts and now that it's concluded, we ask that the Nation to cease any further delays, make the state and local communities whole, and resume payments."

Tensions between the state's Native American casino operators and the Cuomo administration have been heightened in recent years, largely stemming from the entrance of four upstate casinos operated on nontribal land, including some that border on the exclusivity zones afforded the Senecas in western New York and to the Oneida Nation in central New York.